02/01/2020
Immigrants hoping to launch businesses in Canada are believed to have a much harder time accessing capital than their Canadian-born counterparts, but although they seek financing at lower rates than Canadian-born owners, they are approved at roughly the same rate.
A Statistics Canada study on the matter, published Monday, draws on data collected from surveys in 2011 and 2014. Among other conclusions, it said there is “weak evidence” to suggest access to financial capital is more of an issue for immigrant owners of Canadian small and medium-sized businesses.
Approval rates for debt financing or trade credit applications fall within about five percentage points for both immigrant and Canadian-born owners.
“Overall, both immigrant and Canadian-born owners have very high approval rates,” the study’s authors wrote. “The differences in approval rates appear to be relatively small and may be related to differences in firm or owner characteristics.”
What still separates them are the reasons for rejection. According to the study, 43 per cent of immigrant business owners whose applications for credit were denied were told they had insufficient collateral — compared with 25 per cent for Canadian business owners. The runner-up reason, risk, also saw a gap: 39 per cent of immigrant businesspeople, compared with 28 per cent of Canadian-born business owners.
The study also notes that recent immigrants — specifically those who arrived in Canada within the last 10 years — are much less likely to approach formal financial institutions, such as banks, for access to financing than Canadian-born business owners.
